ARK thinks Tesla will be $4,600 per share. But that's not what's most interesting about their analysis.

While the investing and business world is focused on whether Elon Musk will succeed in acquiring all of Twitter, I’m more interested in the latest ARK Invest research analysis predicting a Tesla price target of $4,600 per share in 2026. At a $4,600 stock price, the market capitalizing of Tesla would be $3.3 trillion, over 3X more than the company’s valuation at last week’s market close (Note: The most valuable company in the world, Apple, today is valued at $2.7 trillion).

Before anyone thinks ARK and its founder, Cathie Wood, should be disbelieved outright, remember it was Wood who predicted in 2018 that Tesla eventually would trade at $800 per share. Tesla actually reached $1,229 per share last year before closing at $985 last week, still comfortably higher than her $800 price target prediction. I wrote about this earlier in the year in a newsletter update highlighting how my taGMan portfolio (which includes Tesla) has better performance than Wood’s flagship AARK ETF fund (better performance year-to-date; better in 2021; better over the last five years).

The most interesting part of the research analysis on Tesla is what ARK thinks will be the most important contribution to the company’s valuation in 2026. ARK believes a key driver of Tesla’s business, contributing to 60% of its valuation, will be the development of a robotaxi business. ARK imagines a total addressable market for autonomous mobility services will be between $11 trillion and $12 trillion. I agree.

The robotaxi market will be enormous. In other newsletter updates I’ve reported that the global self-driving mobility market will be a $10 trillion market opportunity, similar to ARK’s new assessment. In fact, the fundamental thesis behind the development of my taGMan portfolio rests on the belief that the taGMan portfolio companies will be winners in the robotaxi market. I believe Tesla, Apple, Alphabet (Google), Microsoft, Amazon, Nvidia, and General Motors (the taGMan companies) will all prosper due to an ability to drive revenue and significant margin from their unique autonomous technology and mobility business solutions.

Wood and ARK indirectly agree with me as well, citing how the commercial launches of Waymo (Alphabet/Google) and Cruise (General Motors) “bolster” their view of robotaxi opportunities as it pertains to their Tesla analysis. Yet, even ARK’s most aggressive bull case outcome for Tesla only has the company generating revenue of $486 billion from autonomous ride-hailing. Remember, ARK believes the total addressable market for ride hailing will be a massive $11 - $12 trillion. That leaves a lot of opportunities in that business for companies not named Tesla.

As I reviewed in the prior update comparing AARK to taGMAn, Wood’s investments in “innovative companies” incorrectly assumes that new technology innovation do not come from legacy companies with an actual history of monetizing innovation. Relative to self-driving technology, Tim Cook hinted in 2017 that Apple was working on autonomous systems for driverless cars. Google, along with its Waymo subsidiary has been working on autonomous driving since 2009. Microsoft is casting a wide net of corporate customers to provide algorithm development and big data analysis to build the machine learning capability necessary for autonomous driving. Amazon acquired autonomous driving company, Zoox, in 2020 while also being a major investor in EV automaker, Rivian. Nvidia’s Jensen Huang said last year that “autonomous vehicle technology is the most intense machine learning and robotics challenge.” And General Motors has been developing autonomous vehicle technology and business solutions longer than any legacy automaker after acquiring Cruise in 2016.

ARK seems to believe Tesla alone will prosper from the future of autonomous mobility. ARK is wrong. If the market is as large as many think (including ARK), the robotaxi market will not be a one-winner-take-all business won by exclusively by Tesla.

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TaaSMaster, LLC is not a registered investment advisor or broker/dealer. All investment opinions expressed by TaaSMaster, LLC are from personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors may occur.